Inver Grove Heights Market Place, LLC v. ANC Foods III, Inc., A07-1197 (Minn. App. 7/1/2008)
| Decision Date | 01 July 2008 |
| Docket Number | A07-1197. |
| Parties | Inver Grove Heights Market Place, LLC, a Delaware limited liability company, Appellant, v. ANC Foods III, Inc., Respondent. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court Dakota County, File No. C9-07-12250.
Ryan R. Dreyer, Brian M. Sund, Eric G. Nasstrom, Morrison, Fenske & Sund, P.A., Minnetonka, MN, (for appellant)
Matthew D. Spohn, Thomas H. Boyd, Winthrop & Weinstine, P.A., Suite 3500, 225 South Sixth Street, Minneapolis, MN 55402 (for respondent)
Considered and decided by Klaphake, Presiding Judge; Johnson, Judge; and Muehlberg, Judge.
UNPUBLISHED OPINION
Appellant, a commercial landlord who brought an eviction action against a commercial tenant for breaching the terms of a lease agreement, challenges following a jury verdict finding that the tenant did not breach the lease. Landlord-appellant contends that the district court erred by (1) denying appellant's pretrial motion for summary judgment and submitting the case to the jury based on its determination that the lease's exclusivity provision was ambiguous; and (2) denying appellant's posttrial motions for judgment as a matter of law or a new trial following the jury verdict in favor of tenant-respondent. We affirm.
The facts of this case are simply stated. Appellant Inver Grove Heights Market Place, LLC (Market Place) and respondent ANC Foods III, Inc. (ANC) signed a lease agreement in May 2003 that included the following exclusivity provision:
[Market Place] covenants and agrees that during the Lease Term it shall not enter into a lease with any tenant in the Shopping Center that operates an eat-in/take-out, delivery restaurant selling sandwiches, salads, soups, pizza, pasta, frozen desserts (yogurt, ice cream), fruit based blended drinks (smoothies), beverages, baked desserts (cookies, brownies, cakes) snack chips, sandwich sauces and other products introduced by Quizno's Classic Subs from time to time so long as [ANC] is not in default . . . .
This provision gave ANC the "right as its only remedies . . . to either reduce its Minimum Rent by fifty percent . . . or to terminate the Lease" if Market Place violated the agreement.
ANC, which operated as Quizno's in the Market Place mall, opened for business in late January 2004. By this time, Market Place had also signed a lease agreement with Old World Pizza, but that restaurant did not begin operating until late June 2005. The record does not reveal whether the parties spoke with one another before ANC determined that the lease with Old World Pizza violated the exclusivity agreement, but ANC began paying half the minimum rent on December 1, 2006. Market Place notified ANC that it was in violation of the lease and subsequently filed an eviction action in January 2007. ANC requested a jury, and the matter was set for trial on February 26, 2007.
Shortly before trial, Market Place filed a motion claiming that the language of the exclusivity provision was unambiguous and Market Place was entitled to summary judgment in its unlawful detainer action. The district court heard the summary judgment motion on February 26 and denied the motion on the record the following morning. A two-day jury trial ensued. At the close of trial, the following special-verdict-form question was submitted to the jury: "Did [ANC] violate the terms of the lease by only paying half of the rent for the months of December 2006 and January 2007?" The jury answered "no."
Market Place subsequently moved for judgment as a matter of law on the grounds that (a) the verdict was manifestly against the weight of the evidence; and (b) ANC was legally estopped from claiming that the Old World Pizza lease violated the exclusivity provision. In the alternative, Market Place moved for a new trial based on the district court's failure to instruct the jury that exclusivity provisions are restraints on trade and must be narrowly and strictly construed. The district court denied the motions. This appeal follows.
The first issue is whether the district court erred when it ruled that the exclusivity provision was ambiguous, denied Market Place's pretrial motion for summary judgment, and submitted the question of the parties' intent to a jury.
The denial of a motion for summary judgment may be raised on appeal from the final judgment. Reinhardt v. Milwaukee Mut. Ins. Co., 524 N.W.2d 531, 533 (Minn. App. 1994), review denied (Minn. Feb. 14, 1995). "On appeal from denial of summary judgment, this court must determine whether any genuine issues of material fact exist and whether the district court erred in applying the law." Zank v. Larson, 552 N.W.2d 719, 721 (Minn. 1996).
The primary purpose of interpreting a lease, as with other contracts, is to determine and enforce the intent of the parties at the time they entered into the contract. See Karim v. Werner, 333 N.W.2d 877, 879 (Minn. 1983). "Whether a clause in a rental agreement—a contract provision—is ambiguous is a question of law reviewed de novo." Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783, 788 (Minn. 2005). The determination of whether a contract is ambiguous depends, "not upon words or phrases read in isolation, but rather upon the meaning assigned to the words or phrases in accordance with the apparent purpose of the contract as a whole." Art Goebel, Inc. v. North Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn. 1997). "A contract is ambiguous if its language is reasonably susceptible to more than one interpretation." Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998). "[W]hen a contract is unambiguous, a court gives effect to the parties' intentions as expressed in the four corners of the instrument, and clear, plain, and unambiguous terms are conclusive of that intent." Knudsen v. Transp. Leasing/Contract, Inc., 672 N.W.2d 221, 223 (Minn. App. 2003), review denied (Minn. Feb. 25, 2004). However, Mead v. Seaboard Sur. Co., 198 Minn. 476, 478, 270 N.W. 563, 565 (1936) (quotation omitted); see also Employers Mut. Liab. Ins. Co. of Wis. v. Eagles Lodge of Hallock, Minn., 282 Minn. 477, 479-80, 165 N.W.2d 554, 556 (1969) ().
Here, the exclusivity provision bars Market Place from leasing space to "an eat-in/take-out, delivery restaurant selling sandwiches, salads, soups, pizza, pasta, frozen desserts (yogurt, ice cream), fruit based blended drinks (smoothies), beverages, baked desserts (cookies, brownies, cakes) snack chips, sandwich sauces and other products introduced by Quizno's Classic Subs from time to time." (Emphasis added.) For two reasons, we conclude that the district court did not err in ruling the exclusivity provision to be ambiguous. First, the parties presented the district court with two different interpretations of this language. Market Place argued that, because the word "and" is a conjunction that means "[t]ogether with; in addition to; as well as," The American Heritage College Dictionary 52 (4th ed. 2002), the plain language of the provision only prohibited Market Place from leasing space to another restaurant selling all of the listed items. Because Old World Pizza only sells three of the items on the list, Market Place contends that it did not violate the exclusivity provision by entering into the second lease. Linguistically, this is at least a plausible reading of the exclusivity provision in the contract. By contrast, ANC argued that the language in the exclusivity provision was taken from the "Permitted Uses" section of the lease, which allowed ANC to use its leased space to sell any of the food items listed. Thus, ANC argued that the only way to harmonize the identical language in the two lease provisions was to read the exclusivity language as barring restaurants selling any of the enumerated items. Without more specific language in the contract or another obvious way to harmonize these provisions, this also is a plausible reading of the exclusivity provision's language. Because the district court was presented with two competing, seemingly reasonable interpretations of the language of the exclusivity provision, we conclude that the district court did not err by ruling the provision to be ambiguous, denying Market Place's motion for summary judgment, and submitting the question of the provision's meaning to the jury.
The second reason we conclude the district court did not err by ruling the exclusivity provision to be ambiguous is that, while both parties presented seemingly reasonable linguistic interpretations of the contract language, neither party's interpretation is functionally reasonable. In determining whether a contract is ambiguous, words or phrases are not read in isolation; courts consider the meaning assigned to contract language in accordance with the purpose of the agreement as a whole. Art Goebel, 567 N.W.2d at 515. Market Place's reading of the exclusivity provision to bar only those restaurants selling every item on the list results in an exclusivity provision that provides no exclusivity at all—no vendor would be prohibited unless its menu included every item on ANC's current or future bill of fare. Thus, Market Place's interpretation creates an absurd result that neither party could have intended as the fruit of an arms-length negotiation conducted with the benefit of counsel. ANC's construction of the exclusivity provision, however, produces a similarly absurd result—under ANC's reading of the language, Market Place could not lease space to any...
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